Asked by franklin  |  Submitted October 18, 2015

Can I borrow from my 401(k) without incurring a tax liability?

I'm 66 yrs old, and I want to borrow $650,000 from my 401(k) to purchase a home before I sell my current home without incurring large tax liability. My 401(k) value is $880,000.

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  Answers  |  1

October 21, 2015

It depends upon the sponsor of the 401(k), and the may be limited by a maximum percentage of its worth. Best advice would be to talk with them to see what options you may have. Understand that payroll will be deducting monthly payments from your paycheck to pay-off the loan. They may be able to finance it for up to 5 years, but that would still be a very large payment, even though you are repaying your own 401(k). There might be better options to finance the purchase of the new home with the idea of paying it off when the current home sells.

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